Bristol-Myers Squibb Company (BMY) discovers, develops, licenses, manufactures, and markets biopharmaceutical products globally. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and Covid-19 diseases.

This month, the European Commission (EC) approved BMY’s fixed-dose combination Opdualag (nivolumab and relatlimab) for the first-line treatment of advanced (irresectable or metastatic) melanoma in adults and children 12 years of age and older with tumor cell PD-L1 expression < 1%.

Also, this month, BMY reported that the Phase 3 CheckMate -76K trial evaluating Opdivo (nivolumab) as a single agent in the adjuvant setting in patients with completely resected stage IIB/C melanoma met its primary endpoint and showed a statistically significant and clinically meaningful benefit in recurrence-free survival (RFS) versus placebo at a prespecified interim analysis.

Furthermore, on September 14, the Board of Directors declared a quarterly dividend of $0.54 per share, payable on November 1, 2022. The stock has gained 16.5% over the past year and 12.5% year-to-date to close its last trading session at $70.15.

Here's what could shape BMY's performance in the near term:

Robust Financials

During the second quarter ended June 30, 2022, BMY’s total revenue increased 1.6% year-over-year to $11.89 billion. Its total expenses decreased 2.2% year-over-year to $9.93 billion. The company’s non-GAAP net earnings surged 13.5% from the prior-year quarter to $4.2 billion, while its non-GAAP EPS grew 18.4% year-over-year to $0.66.

Discounted Valuation

In terms of forward non-GAAP P/E, the stock is currently trading at 9.33x, 46.4% lower than the industry average of 17.40x. Also, its forward Price/Sales of 3.25x is 23.2% lower than the industry average of 4.23x. Moreover, BMY's trailing-12-month Price/Cash Flow of 9.50x is 38.8% lower than the industry average of 15.53x.

Impressive Growth Prospects

Street expects BMY's revenues and EPS to rise 3.5% and 6.7% year-over-year to $47.69 billion and $8.01, respectively, in fiscal 2023. In addition, BMY's EPS is expected to rise at a 4.7% CAGR over the next five years. 

Moreover, the company has an impressive earnings surprise history, as it topped Street EPS estimates in all of the trailing four quarters.

Consensus Rating and Price Target Indicate Potential Upside

Of the 10 Wall Street analysts that rated BMY, six rated it Buy, and three rated it Hold. The 12-month median price target of $79.33 indicates a 13.1% potential upside. The price targets range from a low of $61.00 to a high of $94.00.

POWR Ratings Reflect Solid Prospects

BMY has an overall grade of A, equating to a Strong Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. BMY has an A grade for Value and a B for Growth. The company’s lower-than-industry valuations are in sync with the Value grade. In addition, BMY's solid earnings and revenue growth potential are consistent with the Growth grade.

Of the 163 stocks in the D-rated Medical – Pharmaceuticals industry, BMY is ranked #5.

Beyond what I stated above, we have graded BMY for Sentiment, Quality, Stability, and Momentum. Get all BMY ratings here.

Bottom Line

BMY's strong product portfolio, major clinical and regulatory milestones, and significant growth potential could help the stock sustain its stable performance. Moreover, given the stock's lower-than-industry valuation and favorable analyst estimates, we think the stock could be an ideal addition to your portfolio amid these uncertain market and economic conditions.

How Does Bristol-Myers Squibb Company (BMY) Stack Up Against its Peers?

BMY has an overall POWR Rating of A, which equates to a Strong Buy rating.  Check out these other stocks within the same industry with A (Strong Buy) ratings: Johnson & Johnson (JNJ), Merck & Co. Inc. (MRK), and Novartis AG (NVS).

BMY shares were trading at $71.04 per share on Tuesday morning, up $0.89 (+1.27%). Year-to-date, BMY has gained 16.59%, versus a -21.58% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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